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Does Switzerland live up to its title as Innovation World Champion?

Current economic and technological developments are changing entire ecosystems and putting export-oriented sectors such as mechanical and plant engineering under massive pressure to innovate. As a high-price country, Switzerland’s own innovative strength is also the key to being able to survive in a period of aggressive pricing policies. According to the Global Innovation Index 2018, Switzerland is ideally positioned in this respect: for the eighth time in succession, it has been named the most innovative country in the world. But what does this title say? And does Switzerland really live up to its reputation? Rolf Höpli, industry expert at Zühlke, explains what successful innovation really means.

Switzerland was named “Innovation World Champion” for the eighth time in a row in 2018. What does this title mean?

Rolf Höpli: The Global Innovation Index is published annually by Cornell University, INSEAD and the World Intellectual Property Organization, and uses various indicators to assess the innovative strength of an economy. Among other things, the international comparison of a country’s ability to innovate is measured by the number of patents filed. A high number of registered patents is basically a positive sign, as it testifies to the creativity and intellectual creativity of a country and thus points to a high level of innovative strength. If you take a closer look at the ranking list, however, you will see that not all patents filed have anything to do with innovation, but rather it is often the case that they are concerned with other topics, such as trademark law or procedural protection. For me, it therefore falls too short to use the patents filed by a country as a yardstick for innovation.

How can you tell how much innovation power a country or a company really has?

For me, the central question is how the innovations created are received by consumers and whether they cause a change in behaviour in our everyday lives. For new products and services to be successful, they must meet a genuine market need and be economically viable. Being innovative means not only creating something new, but above all generating added value. There are different levels of innovation: the sustaining and the efficiency-enhancing kind and the revolutionary, disruptive kind. The former belong to the group of life-prolonging and margin-preserving innovations, while the disruptive kinds of innovation produce something fundamentally new. And this is exactly where it gets really exciting: companies that manage to produce such fundamental innovations and thus change the world are at the peak of their innovation capability.

How do you assess Switzerland’s innovative strength in this context?

By and large, Switzerland is solidly positioned in terms of its ability to innovate. Many Swiss companies have a good innovation culture and are good at optimising their products and processes. But other countries, like China and the USA, are way ahead of us when it comes to revolutionary, disruptive innovations. I still see a lot of catching up to do here. The Swiss are ingenious inventors, but often the focus remains merely on developing new products and services for their own small market. The global idea, the determination and the aspiration to conquer the entire world market with one innovation – and not just Switzerland or Europe – are often still missing today. The developments in the watch and finance industry are a good example of this. Although Switzerland is leading in both of these sectors, important product innovations such as Smart Watch or the new digital payment methods have been developed by other countries and, in some cases, even by other sectors. In this context, I believe that Switzerland, as the “Innovation World Champion”, should exploit its potential to a much greater extent and appear on the world market with a little more dynamism and aggression.

The pressure to innovate is particularly high in sectors such as mechanical and plant engineering, which are exposed to high cost and efficiency pressures. How do you assess the ability to innovate there?

In Switzerland but also in Germany and Austria, industrial companies that think and work in a particularly product-specific way are very good at further developing products and extending their service life, for example by adding new features or reducing manufacturing costs. With the further development of mechanics, electronics or the use of embedded software, products are optimised in such a way that they can be kept on the market for as long as possible. However, while many industrial companies jump on the bandwagon of digitisation and network their products and devices, it is often the case that they do not yet understand how they can optimally use the data generated in this way. This lack of expertise is currently still preventing many companies from profitably exploiting the opportunities offered by digitisation and moving away from a pure product manufacturer to an intelligently networked service provider that creates real added value with data-driven innovation. However, this groundwork is crucial if we are to be as aggressive as mentioned above and conquer the world market with innovations.

What measures can companies use to make the most of their innovative strength?

In the DACH region and especially in Switzerland, where prices are at the upper cost limit and where the only raw materials are our creative minds and ideas, companies need to regularly, and at a very early stage, consider what the next major innovations and trends in the market will be, how they could influence the development of their own company and what innovations could be produced by the company itself. In so-called “nightmare workshops”, future scenarios on the major hype topics should be regularly run through and evaluated, and appropriate measures taken at an early stage. In Switzerland, we often find ourselves in a situation where companies are not forced to initiate large innovation projects because of the relatively stable market. However, experience has shown that even successful and well-established companies today have to ask themselves how new technologies and developments could revolutionize their own business – without waiting until they have arrived in everyday life. If these questions are not addressed or addressed too late, the answers will sooner or later be provided by a competitor.